Republic of Moldova | Fiscal Policy 2027: Reducing Labour Taxation, Stimulating Investment and Rebalancing the Tax System

Government Proposes a Fiscal Reform Focused on Balance and Economic Growth

The Government of the Republic of Moldova is preparing a new package of fiscal measures for 2027 aimed at reducing the tax burden on labour income, encouraging investment, and strengthening public revenues by introducing higher taxation on certain activities and products considered harmful to public health or society. The draft policy was presented by Prime Minister Vasile Tofan, who emphasized that the reform is not intended to increase taxation across the board, but rather to rebalance the tax system so that individuals with lower incomes benefit from a lighter tax burden.

Lower Taxes on Labour and Stronger Investment Incentives

One of the most significant measures proposed is the increase of the annual personal tax allowance from MDL 29,700 to MDL 40,000, a change that would reduce the taxation of employment income and increase employees’ net earnings.

At the same time, the Government intends to extend the zero corporate income tax on reinvested profits to small and medium-sized enterprises with annual sales ranging between MDL 100 million and MDL 200 million, a measure designed to stimulate investment and support business development.

Prime Minister: The Tax System Must Be Fairer and More Difficult to Circumvent

Presenting the draft policy, Prime Minister Vasile Tofan stated that the new fiscal framework seeks both to support economic development and to discourage the consumption of products and services with negative effects on public health and society.

“If we want to discourage harmful habits—tobacco use, vaping, especially among young people, excessive alcohol consumption, and gambling—we must tax them accordingly. At the same time, if we want a state capable of financing pensions, salaries, schools, hospitals, and national security, we need a tax system that is simpler, fairer, and more difficult to evade,” the Prime Minister said.

Higher Taxes and Excise Duties on Dividends, Tobacco and Gambling

The draft fiscal policy also provides for increases in several taxes. The tax on dividends would rise from 6% to 8%, while gambling activities would be subject to a 6% tax rate.

In addition, the Government proposes increasing excise duties by 20% on cigarettes, 15% on heated tobacco products, and 50% on nicotine-containing liquids used in electronic cigarettes.

For the first time, excise duties would also be introduced on nicotine-free e-cigarette liquids, sugar-sweetened beverages, and energy drinks. Furthermore, pyrotechnic products would be subject to a 25% excise duty.

VAT Changes for Goods and Services

The Government proposes maintaining the reduced 8% VAT rate for essential food products, including bread, dairy products, fresh fruits and vegetables, as well as medicines and certain pharmaceutical products.

However, the VAT rate for the HoReCa sector, agricultural products, and other food products would increase from 8% to 12%.

Differentiated Taxation for Electricity and Natural Gas Consumption

Another key element of the proposal is the introduction of a differentiated VAT system for natural gas and electricity consumption based on usage levels.

Under the proposal, the first 150 cubic metres of natural gas consumed each month would benefit from a reduced VAT rate of 8%, while consumption exceeding this threshold would be subject to the standard 20% VAT rate.

For electricity, the first 100 kWh consumed each month would be exempt from VAT, whereas consumption above this level would be taxed at the standard 20% VAT rate. These measures are scheduled to enter into force on 1 April 2027.

District heating will continue to benefit from a zero VAT rate.

Public Consultations to Follow

The draft fiscal and budgetary policy for 2027 will be submitted for public consultations in the coming weeks before proceeding through the legislative approval process.